Bond Price Volatility

and Features of Debt

Contacts

Reporters: Frenzy Picasales

Mary Jane Osorio
Marilyn Perez
O Bond – a fixed income instrument that
presents a loan made by an investor to a
borrower (typically corporate or
governmental). Bonds are used by
companies, municipalities, states, and
sovereign governments to finance
projects and operations.
Volatility of Bond Prices
O Bond Prices fluctuate in the secondary
market just like any other security. The
main cause of changes in bond prices is
changing interest rates.

O Volatility – a rate at which the price of

a security increases or decreases for a
given set of returns.
Factors affecting Price Volatility
O Coupon Rate
a low coupon rate increases the price
volatility of a bond

O Time to Maturity
the longer the maturity, the greater the
price volatility of a bond